When you are ready to sell a car, placing an advertisement and meeting with buyers is just a small part of the process. As the seller, you have a variety of responsibilities to complete, such as providing the buyer with the correct paperwork and completing a transfer of ownership on your car title. Selling a car is easy to do, but it is also easy to miss important steps in the sale process if you do not come prepared.

To sell a used car, you will usually have to be familiar with the policies of your state’s Department of Motor Vehicles, which is usually referred to as the DMV. This department, or its equivalent in your state, is responsible for overseeing the transfer vehicle ownership. As such, you will oftentimes need to obtain paperwork from the DMV or even visit an office in person to complete a vehicle sale. In the sections below, learn what steps you need to take when selling a vehicle and find out everything you need to know about the paperwork required to complete a sale.

Documents Required to Sell a Car

Selling a vehicle will require that you have the appropriate documentation proving that you own the car in question. You may also need paperwork that verifies your car has undergone the appropriate inspections required by your state. Although the exact documents required to complete this transaction vary based on where you live, you should be prepared to give the buyer the following:

  • Your certificate of title, also known as a car title
  • An odometer disclosure statement
  • A bill of sale, which is optional in some states
  • A smog certificate, if required where you live
  • A safety and/or an emissions inspection certificate, if required by your state
  • A lien release statement if your car was financed and you have paid it off

Your local DMV may also require that you report the sale by submitting a form. In some states, this is known as a release of liability form, but the exact name and requirements for this type of form can vary based on which state you are in. If your state requires a release of ownership form or any other type of “sold notice,” you will need to submit it to the DMV by a certain deadline in order to prove that you are no longer responsible for the car after the buyer has taken ownership of it. Submitting this form is in your best interest, as protects you from being liable for anything the new owner may do with your vehicle.

Why is a bill of sale form important when selling a car?

When you sell a car online or through any other method, keep in mind that you may be required to use a bill of sale. This is a document that includes details such as:

  • The make, model, year, color and vehicle identification number (VIN) of your car.
  • The current odometer reading.
  • The date the sale took place.
  • The selling price of the vehicle.
  • Your name and address.
  • The buyer’s name and address.
  • The signatures of both parties.
  • An acknowledgment of any liens, past or current.

Not all states require using a bill of sale when selling a vehicle, but these documents can still be useful even if you are not obligated to fill one out. Know that if your state does require this paperwork, you may need to use a special DMV form in order for your document to be legal. If your state does not require you to use a specific form, you can usually make your own document by including all of the information in the list above.

Why is a VIN report important when selling a car?

A vehicle identification number report contains information on recalls for your car as well as the status of its title. In many cases, a buyer will obtain a VIN report on his or her own. However, when selling a used car, you can make the process easier for potential buyers by having this report printed out ahead of time. Most buyers will be interested in seeing what the VIN report says about your vehicle, as the information in it can affect the value and safety of the car. Having the report on hand can help give the buyer more peace of mind that he or she is getting a fair deal.

Processes to Complete When Selling a Vehicle

Selling a car the correct way requires that you follow a few different steps. The exact rules for vehicle sales will vary based on where you live, so it is best to familiarize yourself with local DMV rules before placing an ad for your car. In general, you will need to do take the following steps to complete the process:

  • Record the current odometer reading on the car title.
  • Fill out the seller’s section of the title and have the buyer fill out the purchaser’s section.
  • Sign the title appropriately. Note that in some states, this may require visiting the DMV in person or using a notary.
  • Sign any other paperwork required for the title transfer, such as a bill of sale.
  • Remove your license plates and surrender them to the DMV if required in your state.
  • Notify the DMV that you have sold your vehicle, if this step required where you live.

How to Sell a Vehicle With a Lien

If you want to sell a new car or a used vehicle that you are still paying for, there are a few additional rules that you need to follow. A car usually cannot be sold until you have received a lien release from your lender or until you have paid off your loan. Most of the time, you will need to satisfy your loan before you can legally transfer ownership on your vehicle.

Once your loan is paid off, make sure you obtain a lien release statement from your lender, as the DMV usually requires this paperwork before the new owner can obtain a title and registration in his or her name. While you are usually not allowed to sell a new vehicle to another individual, you can usually trade it in at a dealership. Dealers who accept trade-ins are responsible for paying off any existing liens before the cars can be resold.

Last updated on Friday, February 28 2020.